"For some reason I can't explain
I know Saint Peter won't call my name
Never an honest word
That was when I ruled the world"
"By the last days of the Idiocracy, Camacho-in-Chief was fabricating make-believe trade deals on Twitter. While his loyal acolytes blocked all attempts at impeachment. They were unified by their faith in corruption, and an existential belief in incessant lying"
In summary, what we are witnessing in real-time is stimulus overdose and the usual psychopaths, pushing lemmings straight off a cliff:
Trump's base is super lubed by free money, for what they are about to receive
"The Santa Rally is just getting started"
As of this writing, the U.S. and China just agreed to two totally different trade deals. One put forward by China, and one put forward by the U.S. With nominal overlap.
It's clear in hindsight now, that when Trump put out his typical market manipulation tweet yesterday indicating a "Big deal" is coming soon, the Chinese trolled him with a fake trade agreement. Which forced Trump today to state that a rollback in tariffs is not part of the deal. So what to do, China just held a press conference saying that tariff rollback IS part of the deal. So Trump just put out a tweet saying HIS agreement includes no rollback.
Which is how China and the U.S. have now "agreed" to two totally different trade deals. What happens when you negotiate critical trade deals between the two largest economies in human history, on Twitter.
"I'll have chicken fried rice, beef chow mein, and a fabricated trade deal to go"
NorthmanTrader provides a good summary of the week's events, prior to Friday's gong show. I will reframe it in my own words:
As of this writing, two totally separate fantasy "trade deals"
Massive amounts of monetary liquidity to monetize Trump's deficit. What I call the "MMT" super bubble. The combining of extreme monetary and fiscal stimulus solely to create momentum in asset markets.
A blow-off top in risk-seeking, most evident in semiconductors and Biotech.
Fake reflation. No indication that liquidity is making it into the real economy. Meaning the bidding up of cyclicals on the premise that trickle down demand will follow.
In summary, there is unprecedented risk offset by unprecedented stimulus. Which is why the bullish case still reigns supreme. The belief that printed money is the secret to effortless wealth is complete.
First, on the subject of fake reflation and the MASSIVE cyclical rotation which is now completing the right shoulder, almost two years from when this topping process started.
Perfect symmetry:
Here we see that banks had an identical gap run in early 2018:
Industrials completed their first leg down and a three wave retracement, on the right shoulder this week:
Transports also corrective:
Of course, narco pharma confirms the head and shoulders topping pattern
Meanwhile, due to fake reflation, the deflation trade is now bidless
And as far as the Tech bubble, that went parabolic this week:
Led by semiconductors, which are the intersection of the Tech bubble, the fabricated trade "deal", and the reflation trade:
Many of these parabolic semi stocks exhibit the same three wave corrective pattern as the non-tech cyclicals.
Also led by revenueless Biotech
In summary, record risk can only mean one thing:
That was the advice from Chris Rupkey, who sent a rousing note to clients late Thursday, on the heels of trade optimism that is lifting global equities at the week’s end and a decisive election outcome in the U.K."
Trust proven con men at your own risk. Past performance is no guarantee of future result
"Buy it all."
"Christmas is coming, and my bonus is getting fat."
